In 1984, sixteen islands founded Comhdháil na nOileán. Their aim was to draw attention to the difficulties facing islanders in terms of socio-economic development, problems which they felt were not being addressed at either a regional or national level.

At that time, there were serious shortcomings with access to the islands and health and other essential services were completely inadequate.

Due to lack of funds and the difficulties inherent in running a voluntary organisation of islanders without administrative support, Comhdháil stopped functioning after a few years.

In 1993, Comhdháil Oileáin na hÉireann was re-established and became a co-operative in 1994. Comhdháil then succeeded in getting recognition as a Leader II company, was granted £1.3m initially and was able to open an office (in Inis Oírr, the smallest of the Aran islands) and employ full-time staff.

In 1998 Comhdháil succeeded in getting funding under the European New Opportunities for Women programme and 106 women from 16 islands participated in the two-year programme.

Comhdháil then administers the National Rural Development Programme (NDRP) for the islands and was allocated €1.845m for the period 2002-2006.

Comhdháil was a founder member of the European Small Islands Network (ESIN), set up in 2001 and was the lead partner in an interregional project, funded by Interreg IIIc.

In 2005, Comhdháil succeeded in getting funding from the Department of Community, Rural and Gaeltacht affairs to employ a Manager who would work independently of the NDRP and other programmes and develop Comhdháil's policy nationally. This post was funded initially until the end of 2007 and was extended to the end of 2008.